About the author

Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus. He is best known as the creator and editor of the popular economics blog Carpe Diem. At AEI, Perry writes about economic and financial issues for American.com and the AEIdeas blog.

According to government forecast, abundant and reliable fossil fuels will supply 80% of U.S. energy demand in 2040

The Department of Energy released it Annual Energy Outlook today for 2013, with updated estimates of U.S. energy consumption by fuel source out to the year 2040 in Table A1 of the report (data here) . Based on the government forecast, the fossil fuel (coal, natural gas and oil) share of U.S. energy consumption will fall only slightly in the future, from 84.3% of total U.S. energy demand in 2010 to 80.1% in 2040 (see chart above). On the other hand, the future of renewable energy as a fuel source is not looking so bright, in terms of its contribution to America’s future energy demand. In 2010, renewables (wood, municipal waste, biomass, hydroelectricity, geothermal, solar, and wind for generation in the electric power sector; and ethanol for gasoline blending and biomass-based diesel in the transportation sector), contributed only 6.8% of U.S. energy consumption. Even by 2035, almost 30 years from now, all renewable energies together are expected to contribute less than 11% of the total energy demand in the U.S.

Bottom Line: The scientific and economic realities (and even the government’s own forecasts support this) are that affordable, abundant, and reliable hydrocarbons will continue to be the major source of energy that will fuel America’s economy well into the future. Despite the Obama administration’s embrace of alternative energies like solar and wind power as the “energies of the future,” and the President’s dismissal of oil as a “fuel of the past,” it should be clear from today’s Department of Energy forecast that hydrocarbon energy is America’s future, and renewables will continue to make a relatively minor contribution to U.S. energy demand. It’s the rich oceans of energy treasures beneath the ground (fossil fuels) that will continue to power the U.S. economy for generations to come, and not the taxpayer-dependent sources of energy that come from above the ground (like wind and solar).

Our standard of living is lower today than in 2007, and it’ll improve much more slowly at best for several decades (given the Baby-Boom retirement, along with regulations, taxes, and government spending).

it’s going to be very, very easy to tell when an alternative technology has become competitive with hydrocarbons.

it will spread like wildfire.

it is also very easy to tell when a technology is not ready as it requires massive subsidies and still does not get adopted much.

wind farms are really just subsidy farms. solar is mostly the same way.

the one exception here might have been nuclear, which can produce electricity quite competitively with the rest of the baseline grid, but has been basically drummed out of contention in the US through impossible regulation and permitting requirements.

I wonder, is it a case of current alternatives simply not being viable or is it a lack of foresight and patience for these new technologies to get off the ground or are they viable but mismanaged/funded?

Some of these “new technologies” are nothing more than recycled failures from Jurassic Park and earlier. Windmills and power from the sun are two good examples. Even with the application of modern 21st century technologies and billions of taxpayer subsidies, they remain uneconomic, unreliable and inefficient. They require massive and very expensive back-up power sources in order to be considered realistic power alternatives capable of reliably running a modern economy. You simply can’t send 5,000 factory, mill, plant, foundry, warehouse, food service and mine workers home because the lights went out, the air conditioning is down, the production lines won’t move or the toilets won’t flush.

The future of alternatives, at least for the next 100 years, is that they will remain alternatives.

wind is a great example. it is NEVER going to be viable. not ever. the reality of the power over sweep equation means that wind will never produce more than about 15-20% of faceplate rating even in optimal locations. worse, it is intermittent and difficult to predict which means it can only even be surge power, not baseline.

solar can likely be made to work at some point if cells can be made efficient enough and price drops.

geothermal has potential.

tidal/wave etc looks really tough. the realities of the ocean tend to really play hell with large pieces of electrical equipment.

there is a ton of energy there, but all the projects i have seen have been pretty dramatic failures thus far.

there has doubtless been some severe mismanagement as well, but that is the nearly inevitable result of big government subsidies, grants, and loans.

when funding is not based on return, you get malinvestment, nepotism, and theft. think: solyndra.

I think, Moe, that it’s a combination of the techs not being viable, and some mismanagement.

Wind power requires a back-up source of power for when there is no wind.

Solar requires very large and expensive panels to produce a relatively small amount of energy.

Hydro’s not bad, but it requires a powerful river.

Additionally, for all three, the space they require to produce the same amount of energy as fossil fuel is rather large.

There is also a matter of cost. Fossil fuels are amazingly cheap and effective. I read an article that said for every one unit of energy used in the production process for oil, the oil generates 6 units back (ratio 1:6). For renewables, that ratio is closer to 1:0.9 (for every unit of energy expended, 0.9 units are created).

But, for the sake of argument, let’s give the government the benefit of the doubt here. Let’s assume that alternatives really are the energy of the future and the graph Dr. Perry posted is completely wrong. The government has been giving subsidies to companies and individuals so the cost can fall. Well, the tariff on Chinese solar panels isn’t doing renewables any favors. If the problem is that the costs are too high, and the Chinese are willing to sell us solar panels for pennies on the dollar, how will blocking these imports help renewables become cheaper? That’s just bad management right there.

And if I’m not mistaken, I believe something like 75% of all potential hydro power in the US is already harnessed. Beyond that there are serious navigation and environmental issues, and the problem of flooding large areas to create reservoirs.

Some alternatives are simply not viable because they are not dense enough to matter. Others will come on line as we cross over economic thresholds. Overall, the book is very positive, since much of the technology we need is already here.

This is one thing I like, Rufus. Forgetting how one feels about alternatives, we do have the technology to tap into them. This isn’t theoretical stuff. Since the tech already exists, everything from here on out is, in theory, improvement!

“One option for transitioning away from our current hydrocarbon-based energy system to non-carbon sources is geothermal energy – from both conventional hydrothermal resources and enhanced geothermal systems,” said Zoback, a senior fellow at the Precourt Institute for Energy at Stanford.

Unlike conventional geothermal power, which typically depends on heat from geysers and hot springs near the surface, enhanced geothermal technology has been touted as a major source of clean energy for much of the planet.

The idea is to pump water into a deep well at pressures strong enough to fracture hot granite and other high-temperature rock miles below the surface. These fractures enhance the permeability of the rock, allowing the water to circulate and become hot.

A second well delivers steam back to the surface. The steam is used to drive a turbine that produces electricity with virtually no greenhouse gas emissions. The steam eventually cools and is re-injected underground and recycled to the surface. In 2006, Tester co-authored a major report on the subject, estimating that 2 percent of the enhanced geothermal resource available in the continental United States could deliver roughly 2,600 times more energy than the country consumes annually.” — Watts Up With That

The man who was within sight of the presidency 12 years ago has transformed himself, becoming perhaps the world’s most renowned crusader on climate change and a highly successful green-tech investor.

Just before leaving public office in 2001, Gore reported assets of less than $2 million; today, his wealth is estimated at $100 million.

Gore charted this path by returning to his longtime passion — clean energy. He benefited from a powerful resume and a constellation of friends in the investment world and in Washington. And four years ago, his portfolio aligned smoothly with the agenda of an incoming administration and its plan to spend billions in stimulus funds on alternative energy.

The recovering politician was pushing the right cause at the perfect time.

Fourteen green-tech firms in which Gore invested received or directly benefited from more than $2.5 billion in loans, grants and tax breaks, part of President Obama’s historic push to seed a U.S. renewable-energy industry with public money. — Fox News

Moe says: “I wonder, is it a case of current alternatives simply not being viable or is it a lack of foresight and patience for these new technologies to get off the ground or are they viable but mismanaged/funded? or a combo?”